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Monday, April 6, 2009

Tweet It's that time of year to gather up all those W-2G's (been looking all over for mine) and think about how one goes about reporting them and how to treat gambling losses. For the casual player losses from wagering transactions are allowed only to the extent of the gains from such transactions, but only for those who itemize. The casual gambler who elects to itemize deductionsmay deduct the losses, up to the wagering gains, does so on Form 1040, Schedule A, Line 28 - other miscellaneous deductions (not subject to 2% floor -- Yay). However, the casual gambler who takes the standard deduction rather than electing to itemize may not deduct any wagering losses.

The professional (full-time) gambler is a whole different story (please consult your tax advisor for any advice in this area) and there is a famous court case (Commissioner of Internal Revenue v. Groetzinger) that found in favor of the full-time gambler being able to deduct not only losses, but expenses on Form 1040, Schedule C (Profit or Loss from Trade or Business). The basis for the decision revolved around the issue of "what qualifies as being either a trade or business under Section 162(a) of the Internal Revenue Code." The Court ended up concluding in this case that "if one's gambling activity is pursued full time, in good faith, and with regularity, to the production of income for livelihood, and is not a mere hobby" it qualifies as a trade or business under the Code. n this case the taxpayer spent up to 80 hours a week doing gambling-related activities, had no other employment and for the year in question has $70K in winnings (not bad). He basically made a case that it was his livlihood, thus he was allowed various expenses paid to carry out his business. What was interesting in this 1987 court case was that each case has to be reviewed on a "case-by-case basis" for determing whether the facts support the trade/business argument.

Some other interesting tax cases can be found here. Make sure you take your fair deduction and have receipts or activity printouts from your ADW to support your losses.

Racing: Blah to the Blah

- I'd like to thank Affirmatif (or Affirma-flopped as Colin's Ghost so aptly named him) for blowing up my Keeneland Pick-3 yesterday after two $11.80 winners in the first two legs. I know, I know, that's why they call it gambling.

- I'd like to say I foreshadowed the Mullins syringe affair with the wienermobile appearance in Saturday night's post, but I probably shouldn't take credit. At least his Steve Martin defense tactics came in handy.

- I'm the biggest Derby jinx out there. First, I put a Pool 1 wager on Big Drama (injured), then I include The Pamplemousse (injured) and Imperial Council (off trail) in the Pool 2 futuracta. So yesterday I put in another flyer (i.e., stupid investment) futuracta box in Pool 3 on IWR (see Mullins), Quality Road (see quarter crack), Chocolate Candy (safe for now) and Regal Ransom (sheikh's gotta win one of these years - probably picked the wrong one). I'll be sure to make my Derby selections public so y'all can stay away from them.

- Can't wait to hear how the NTRA spins this one based on all that progress they've been making.

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About Me

Gene Kershner - EquiSpace

A bean counter by trade, writing about horse racing is my passion. Entered the blogosphere in April 2008 and in October 2010 became the racing correspondent for The Buffalo News. In 2012, elected into the National Turf Writers and Broadcasters Association (NTWAB).